Exploring The Procurement Relationship

Procurement has a vital role to play in any organisation, and can also help in the development of close working relationships between clients and their agencies. More enlightened Procurement departments understand the value of research. They are more likely to acknowledge the expertise of Insight teams and to leave them to develop relationships with key suppliers, just providing help where needed (such as in contract negotiation and dispute resolution).

 

Insight teams involved in procurement need to look at the relationship from both the buyer’s and the supplier’s viewpoints. From a buyer’s point of view a relationship can be categorised using the following quadrants:

 

The typical research role in each of these quadrants is:

 

 

 

Sensible cost control – small ad hoc and tactical projects that don’t need a lot of procurement muscle.

Invest and preserve – partnership with an individual who has specific industry experience of great value. This is a resource to cherish and preserve.

Strategically critical – partnership with an agency that is conducting a series of large, strategic, linked projects with a very high business value.

Aggressive cost management – large and expensive (but not always critical) projects with procurement aggressively managed to minimise cost. Many trackers could fall into this category.

 

The decision of where to invest in relationships also depends on the view from the other side of the matrix, from the supplier’s point of view:

 

 

This is because suppliers also need to decide where to invest their time and resource, using this second matrix. The most successful relationships will develop if both client and agency place each other in their top-right segment. Many relationships fail due to a mis-match in mutual value. Think about how important your business is to your key suppliers. Which box would they put you in?

 

Both clients and agencies should therefore make an honest appraisal of their potential relationships. This won’t always involve a partnership. Sometimes, a relationship might simply be transactional and based on sensible cost management (indeed, sometimes they shouldn’t actually do business together at all!)

 

To find out more about the whole subject of the client/agency relationship, click here to read ‘Clients and Agencies – From Relationships in Crisis to Powerful Partnerships’ – a paper given by Customer Insight Solutions at the MRS Conference 2007.

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